This week, a management team at MWW Group, including majority shareholder CEO and founder Michael Kempner, bought back the agency from Interpublic Group, making MWW a top five independent firm.
The agency, which IPG acquired in 2000, reported $27 million in revenue in 1999, and told PRWeek that it expected to generate $35 million in revenue in 2000. It's estimated to have $40 million in revenue in 2010.
Kempner didn't elaborate on the inspiration behind the move aside from a desire to be more entrepreneurial and focus on long-term growth. But it's a unique approach for a generalist agency to cede the financial and new business benefits of a global holding company – IPG also owns Weber Shandwick, Golin Harris, and various other marketing properties.
Richard Edelman, CEO of Edelman, attributes the move to potential conflicting strategies on both sides. “I don't think [IPG] was going to build a third network globally and [Kempner] is an ambitious guy,” he says.
Though unique, the approach puts MWW in the rank of the top five independent firms, led by Edelman, a firm that has doubled its size over the decade. He says that being independent means the firm doesn't “have to make 20% margins,” or focus first and foremost on finance operations.
APCO Worldwide, an agency specializing in corporate PR and public affairs, is also a top five independent firm that bought back full ownership from a holding company. Thus far a success story, CEO Margery Kraus cites similar intentions when it initially looked to buy back the shares owned by Grey.
At the time, the firm received backing from a private equity firm, which enabled it to invest in new resources such as talent and office locations. Though the firm often conducted business in New York, Kraus says that Grey did not want to open an APCO location in the city where it already had its namesake agency and GCI.
APCO went from a $3 million firm to a $50 million firm as part of Grey, but its growth as an independent firm is comparable, Margery explains. The firm has doubled in size and opened 10 offices since the buyout, she says.
Though there are financial benefits of a holding company, especially during a recession, “we had more resources to make investments as an independent firm,” she says.
Russo Partners is another example of an agency that went independent with the realization that its holding company, Havas, was only interested in its few big pharma clients, versus the 50 or so smaller healthcare companies that created its majority portfolio. Within Havas, Russo was part of EuroRSCG Life.
Chairman and CEO Tony Russo explains that the firm perceived the small biotech and medtech firms as a growing market, and with the talent and interest in that area, it decided to buy back its independence.
“That's proven to be the case despite the downturn and economy in 2008,” he says, explaining that the firm has seen more growth as an independent unit than it did when it was part of a global holding company.
The firm did not rely on private equity funding or resources when it went independent, Russo says . "I used the money I had from the original sale of the company," he explains. "To go from one to the other wasn't really appealing to me."
Kempner declined to provide financial details about the buyback, but he did say that undisclosed outside investors and senior managers own minority stakes in the independent venture. He says although he is an operating advisor at Pegasus Capital Advisors, the private equity firm is not an investor.
Kempner confirmed the venture is not backed by any private equity, which may present a different kind of challenge - or opportunity, according to some top marketers who compare private equity financial control to that of a holding company.
Kraus says that as an independent entity, her firm got more aggressive about how it marketed itself.
To Kempner, Edelman says, “Welcome back.”